The “C–Suite” in 2013 and beyond (10/4): who should really be there?

November 21, 2012

Business is complex:

Operating a successful business has become extremely complicated, especially operating a decentralized business that moves people and products (or services) on a cross-national basis. The CEO is technically called-upon to have a finger on the pulse of the business, the share price (if a public entity), the applicable regulatory regimes (local, provincial or state, national, and regional with regard to its principal jurisdiction, then the same again for every nation in which it operates), Cybersecurity and privacy laws and protections, contingency planning, HR practices (both for the main entity and for any subcontractors in each and every jurisdiction where such subcontracting has gone), marketing and branding efforts both online and offline, and so forth.

CEOs are overworked:

At the same time, and as a result of this requirement for all-seeing and all-knowing CEO qualities (ready at a moment’s notice or with minimal briefing to respond to an unscripted journalistic query or a legislative summons/subpoena and investigation), a constant stream of what used to be paper that you could see and pile and file, and see as it decreased in amount, but is now “all electronic” in voicemails, (both on the portable smartphone and the office line), emails, texts, and attached spreadsheets, letters, and memos, demands to be immediately addressed. Is it any wonder then, despite the occasional intentional fraud coming to the light of day, that a few things will be missed every now and then?

Help is available:

Most if not all CEOs have assistants, and VPs or Directors to assist them in running the company, with a handful of senior officers who may even add the “Chief” designation in their titles. But, is it now time to go a little further, and broaden the pool of C-Suite membership? I would say, yes, and propose an expansion to 10 (“ten”) such members, including the CEO, as divided into 4 working groups – in a “10/4 Formula”.

Ten Executive Officers:

As listed in acronym alphabetical order, the expanded “10/4” C-Suite would include the following members.

(i) CAO (Chief Administrative Officer): Responsible for overall management of residual line and staff functions and their budgets, the CAO arguably has more authority than all of the other executive officers apart from the CEO. Residual Line functions include security, supplies and procurement, and transportation (with IT already carved-out and assigned to the CIO). Residual Staff functions include personnel and recruitment, work/life balance and morale, and plant and maintenance (with finance, and legal already carved-out and assigned to the CFO and CLO respectively).

(ii) CCO (Chief Contingency policies, plans, and practices Officer): Working primarily with the CLO and the CPO, this executive officer will focus exclusively on forming contingency policies (both staff- and customer-facing), devising and implementing contingency plans, and instituting contingency best practices with entity-wide knowledge, training and testing, and modification as advised or required. This executive officer would be supported by a team of technical and scientific experts, professionals with deep experience in that particular business or group of business lines, hedging strategy specialists and advisors (coordinated through or embedded with the CFO), and a host of disaster management practitioners well-versed in the mix of political, environmental, and societal hazards that the company might find itself facing. We all see how complex emergencies can be created by the interplay of:

(a) Combined environmental hazards (earthquake followed by a tsunami in Fukushima, Japan, that led to loss of life and food resources, radiation leakage, and mass evacuations that impacted both production capacity there and elsewhere, and consumption levels in Japan and other countries);

(b) Combined human failing and product defect (excessive speed and bad watch practices in avoiding icebergs that led to the Titanic sinking with significant loss of life, with added contribution from bulkheads that did not rise all the way to the ceiling, allowing them to be over-topped by the incoming water);

(c) Combined technical and human failings (allegedly bad directions and reputedly absent leadership that led to the grounding of the Costa Concordia, and to its captain being neither the last to leave the listing and helpless vessel, nor the first to lead a safe and orderly evacuation);

(d) Combined technical and human failings (faulty production processes, sanitary practices, and management or regulator laxity) leading to recalls of raw foods (lettuce, peanuts, eggs), processed foods (packaged foods and processed or sold-raw meats), and other consumables in painkillers, pet food, and vitamins;

(e) Single environmental hazard (volcanic eruptions on Iceland’s Eyjafjallajoekull glacier and on Chile’s Puyehue-Cordon Caulle volcanic chain, respectively) that shut down air traffic over vast areas; disrupting business and personal travel for a significant period of time and causing many billions in losses to be incurred;

(f) Combined environmental hazards (hurricane and wind, with flooding) that destroy crops and inventories of goods, soak and damage transportation and infrastructure with salt water, and displace large numbers of people due to the lack of power, destruction of local food sources, and absence of safe and mould-free shelter; especially critical during colder weather that could also generate snow and ice, or during a storm season or tornado season –generating additional casualties from the perils of pollution and exposure to the elements;

(g) Possible product defects (A.D. 2012 parking garage collapses in Elliot Lake, Ontario, in Woodbridge, New Jersey, and in Dorval, Florida) that are exacerbated or tested to destruction by heavy or concentrated loading (other building and structural cave-ins/collapses), harsh winds (Tacoma Narrows bridge collapse), and tremors (earthquakes and nearby blasting) or severe rains and flooding (sinkholes, bridge washouts, shore and hill erosion, and subterranean tunnel and sewer flooding), leading to loss of life, trapped and injured survivors who require complex and costly water rescue, aerial evacuation, and high-angle rescue (with or without enclosed space shoring, rescue dogs, and specialized robots or probes), significant infrastructural damage, and additional losses of homes, vehicles, and other property;

(h) War or sustained insurrection and its knock-on effects in unregulated munitions flow, refugee movements, compounding food and medical deficiencies with resultant disease outbreaks, violence against refugees, and creeping destabilization of neighbouring and hitherto peaceful states;

(i) Human maintenance and management failings coupled with an ultra-hazardous activity (massive oil discharge in the Gulf of Mexico, with ecosystem damage and sundry knock-on effects impacting businesses in the food, transportation, hospitality, and tourism sectors);

The risks of something bad becoming “very” bad are significantly heightened in an interconnected, co-dependent, and wired world. Climate Change threatens to put entire chains of unprepared suppliers, manufacturers, and growers out of business; whether due to direct disruptions or disruptions of their own third-party suppliers, manufacturers, and growers. This can go on far down the line, and everyone could be stuck.[1] Complex emergencies and preparations such as these require a lot of thought and planning, and likely now, verified certifications from counterparties that they have taken certain precautions to guard against being caught without a backup plan to the detriment of others. This is the unenviable task of the CCO – to ensure full recovery from all disasters … in the long-term! *The short term is a different story.*

(iii) CEO (Chief Executive Officer/Executive Director): Responsible for the strategic directions and strategic outcomes of the company, the CEO is the head coach. Assistant coaches are the other C-Suite members, and a “conductor” analogy will not work here because an orchestra cannot function when multiple conductors and sub-conductors are calling their teams of workers (in silos/fiefdoms) to play divergent, discordant tunes. Inevitable results of the latter are committed cacophony, complete confusion, and a corporate collapse.

(iv) CFO (Chief Financial Officer/Comptroller): This officer is responsible for all fiscal affairs, including Budgeting and Forecasting (projections, allocations, and analytics), Treasury (expenses and receipts, and credit and investment management), Financial Statements (reporting and internal audit), and all policies, protocols, personnel, and computer programs and platforms (tools) that are involved in this complex mix.

(v) CIO/CTO (Chief Information Communications Technology Officer): The CIO is responsible for Network Architecture (designing, building, and configure a network that meets specifications and serves desired functions), Enterprise Resource Planning (allocation of and budgeting for, I.T. resources, including distinct subsystems for e-commerce, sales and billing, CRM and data governance, CAD/CAM, SCADA, and internal communications – voice, data, intranets, mobile applications), and Network Administration (access protocols, physical and electronic security, data integrity and backup, business continuity planning in the I.T. domain), and all policies, protocols, personnel, and computer programs (tools) that are involved in this complex mix. An additional function of Privacy and Data Protection (PDP) may reside herein, with the office and functions of the XCO, or with the office and functions of the CAO.

(vi) CLO/GC (Chief Legal Officer/General Counsel): The GC protects the organization against known and developing risk factors; represents the organization to third-parties and defends its interests (whether in contractual protections and advance due diligence, litigation and alternate dispute resolution, or to regulators and through regulatory processes including GRC (governance, risk, and compliance) functions, and IP registration and licensing), and advises the organization on overall legal strategy, or legal aspects/repercussions of specific or proposed strategies and actions. The CLO will be assisted by subordinates and may have relationships with specialized outside law firms in desired fields (or practice area group environments),[2] to which he or she will assign work as needed to support In-House legal functions.

(vii) CMO (Chief Marketing Officer): Marketing takes many forms, whether in the product or service itself, traditional print and radio advertising, or word of mouth (which includes word of web and word of viral video whether good or bad, and word of both product placement and recall). Product recalls, though starting as negatives, may actually garner fans from the way in which the manufacturer or producer responds to the adverse event. This role needs a nimble operator who has a good command of the technical marketing side (web and graphic design, wordplay, and psychology), and a social media team with dedicated monitoring functions, previously archived quick response webpages for a variety of scenarios, and an outside media analytics and PR firm on standby. Special care must be taken where an employee comes aboard with his or her own social media following, or develops one while working on the company time and dime. It can be a two-edged sword.

(viii) COO (Chief Operating Officer/Managing Director/President): Keeping the day-to-day operations on an even keel, with proper and well-documented sales practices (Sales), timely and accurate order fulfillment (Manufacturing/Service Delivery), and above-board collection and revenue-recognition practices (Finance) is a critical chain to maintain in good working order, as it is the very lifeblood of the company. A failing on any one of these three links, could throw the ship off course or even sink it. Ideally, the COO will select either Sales or Manufacturing/Service Delivery as his or her primary focal point, and be assisted by 2 subordinates (for finance and the option not selected). Strict segregation of duties (SOD) will prevent those deputies from dominating said functions, which must be the primary responsibilities of the CFO (Finance) and the CMO (Sales) respectively. However, they must work to ensure that these three Executive Officers and their functions are all very well coordinated.

(ix) CPO/CDO (Chief Plans, Projects and Partnerships Officer; also sometimes termed as the Chief Development Officer): Long-range planning, including succession planning and insurance strategy (except hedging which lies with the CFO), is the responsibility of this executive officer. In addition, he or she will take the oversight lead on any critical projects (plant upgrades, significant new products), or partnerships that would otherwise and unduly distract one of the other executive officers.

(x) XCO (Cross-national Coordinating Officer): Many businesses have an international profile, even those with only occasional foreign sales. This can include employees of many nationalities, cultural or religious preferences and practices, far-flung operations or contract manufacturing plants and raw material sources, or exports to jurisdictions with myriad regulatory regimes. It is the XCO’s job to ensure everyone is as close to being “on the same page” as possible, company ethical and compliance practices are adhered-to across the board – despite cultural differences, and that consistency is maintained in operations, administration, and responses to any crisis.

Four Working Groups):

(1) Working Group 1 – Ongoing Operations (OO):

Led by the CEO, this working group would focus on oversight and control of day to day operations. The CEO would be joined in this effort by the COO and the CMO.

(2) Working Group 2 – Internal Controls (IC):

Led by the CFO, this working group would focus on compliance and internal controls in creating, implementing, monitoring, and updating a comprehensive GRC program. In addition to “compliance”, this working group would also be tasked with leading in “cooperation” with regulators, due to the need from time to time for certain companies and industries to respond to requests for cooperation with regulators over investigations, boycotts and sanctions, recalls, security measures, and other joint action that needs high levels of coordination. The CFO would be joined in this effort by the CAO and the CIO.

From time to time, and for better organizational coordination overall, OO and IC might hold unified meetings (virtual, in-person, or a combination of these), and they would be joined there by the CLO. Of course, the CLO could also sit-in on IC and OO meetings when separate; time and workload permitting and as the needs of the working groups and the business so require.

(3) Working Group 3 – Contingencies, Policies, and Projects (CPP):

Led by the CLO, this working group would focus on contingency planning, company policies, and the oversight of critical or large projects. The CLO would be joined in this effort by the CCO and the CPO.

(4) Working Group 4 – Global Oversight (GO):

Led by the XCO, this working group would focus on keeping an eye on the global pulse and wellness of a decentralized entity. Of course, this working group would only be added as and when warranted. Drawing on other executive officers to fulfill its mission and mandate, GO’s two component sub-groups would be:

*PACE (Privacy, Administration, Cybersecurity, and Environment), and

*COG (Contingencies, Operations, and GRC).

PACE: XCO as the standing lead, and joined by the CAO, CFO, CIO, and CPO.

COG: XCO as the interim lead, and joined by the CCO, CLO, CMO, and COO. The CEO would be the standing lead for COG, as well as the unified meeting sit-in member for the GO and CPP working groups (as is the CLO for the OO and IC working groups).

Challenges:

Some might say that these functions replicate those of the Board and of the Committees of the Board, to an extent. I agree in part because this group of 10 top company executives could essentially be said to constitute an Executive Board (supervising day to day functions). The Supervisory Board (Board of Directors) would still be responsible for oversight, as 10/4 is merely designed to ensure that adequate attention is given at the day-to-day level of governance, to those items and points that have most often tended to cause slip-ups in recent memory (such as governance gaps; lax compliance or internal controls; financial misstatements; and inattention to plugging risks of faulty internal audit, insufficient segregation of duties, lax supervision, or failure to timely act on employee grievances including but not limited to harassment claims), and engage the Board’s attention to find, fix, and further prevent them from recurring, with other appreciable (and avoidable) regulatory and legal costs and repercussions.

Coordination of these now distributed executive-level functions would likely also be a challenge, at least initially. However, once 10/4 is firmly in place and with the proper implementation of the proposed meeting and joint meeting structures, along with open lines of communication, this should diminish over time.

The need to pay perhaps exorbitant salaries to even more senior officers might also seem like a challenge. However, there is plenty of un-utilized (read: “unemployed”) and otherwise under-deployed (“unhappily” under-employed) talent available in the current economic climate that would welcome the opportunity to apply themselves to these sometimes new and always interesting roles; not exactly for a pittance as professionals should be given their due respect, but with every intention of earning their way and growing with the company.

Opportunities:

Added specialization of function and better core focus, are obvious benefits. Clearly, each of these ten functions demands a full-time focus. C-Suite members will be better able to drill-down within their assigned roles with a lot less distracting “noise” and far fewer demands for assistance or advice on matters outside their scope that cause a frantic scurrying for the right answer, and sometimes outside the company at a cost commensurate with the urgency of the request from …. “higher up”. More skills and abilities can therefore be retained in-house, and appropriate additional expertise sourced as needed, or retained on call, outside the company.

Growth Map:

Many companies will tend to “really” start with a core of 3 principals, the CEO, CMO, and CIO (if technology focused); or the CEO, CMO, and COO (if in services or a widget-maker). Of course, all will wear multiple hats from the start, and be drawn to move in many directions at once. While still small or a start-up, this can often be managed, albeit with a little effort and significantly less sleep.

After a time, they will generally add the CLO and CFO as compliance and cooperation, and the need to create, monitor, and keep-up proper records and accounts in-house (as opposed to having an on-call book-keeper), all become more important over time. Other motivators for this expansion at the top might be the need to seek financing from Angel Investors or VCs, or preparation for an IPO – or even at that early stage, an acquisition of more capacity or talent that resides in another business.

Eventually, a CAO will be added to free-up CEO or CMO time spent on day-to-day administrative duties for other functions, and the CCO and CPO will be brought-on as the needs of the entity or best practices dictate; which may even precede the addition of a CLO or a CFO, or both. Similarly, the presence or onset of major cross-national operations may bring in the XCO earlier, or later, in the growth process.

Summary:

10/4 is quite doable, and the first-movers, as always, will be able to iron-out the kinks early, and share or not share their tips with competitors in their industries as they strive to maintain their own competitive leads. The four corner offices can thenceforth be reserved as boardrooms for meetings of the four working groups or other teams within the work environment that need the separation; while executives sit closer to the middle of the floor and the action, creating a more involved and collaborative decision-making model, and smoother workflow with face-time and an all-ranks accountability that self regulates against water-cooler lounging, social media misuse, and other forms of slacking-off, without the need for certain increasingly used (and sometimes highly intrusive) technical tools to protect and promote productivity. Let’s see who, if anyone, will go for it first … 10/4?!

Ekundayo George is a sociologist and a lawyer, with over a decade of legal experience including business law and counseling (business formation, outsourcing, commercial leasing, healthcare privacy, Cloud applications, and Cybersecurity); diverse litigation, as well as ADR; and regulatory practice (planning and zoning, environmental controls, landlord and tenant, and GRC – governance, risk, and compliance investigations, audits, and counseling in both Canada and the United States). He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S.A.). See: http://www.ogalaws.com

He is an experienced strategic and management consultant; sourcing, managing, and delivering on high stakes, strategic projects with multiple stakeholders and multidisciplinary teams. See: http://www.simprime-ca.com

Backed by courses in management, organizational behaviour, and micro-organizational behaviour, Mr. George is also a writer, tweeter and blogger (as time permits), and a published author in Environmental Law and Policy (National Security aspects).

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